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Bottling the Genie

Deck:

Why deregulation is easy and reregulation is hard.

Byline:

Douglas N. Jones

Author Bio:

Douglas N. Jones is professor emeritus of public policy and management at the John Glenn School of Public Affairs, Ohio State University, and director emeritus of the National Regulatory Research Institute.

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The now-familiar paradigm shift from traditional regulation of public utilities—and for that matter of financial institutions—to relaxed regulation was fairly easy to come by. But reverting to more stringent social oversight of these sectors when need has arisen—from failed policies, promises unfulfilled, or outright scandal—is very difficult.

The twin notions of “technical feasibility” and “value acceptability” together allow or hinder these opposite courses of policy action. In this context technical feasibility has to do with the capacity in place to handle a particular policy step, e.g., available technology or an existing market or institution. Value acceptability has to do with the readiness of the public or decision elites to welcome—or at least acquiesce to—the step. Both elements combined in the mid-1980s onward to allow the aggressive deregulatory movements in transportation and public utilities—and more recently in the banking and investment sectors. The resulting retrenchment of social regulation was wide and deep.

By contrast, in instances where relaxed regulation has either failed or fallen well short of the claims of its proponents, reregulation toward more traditional comprehensive and sustained oversight has been extremely hard to attain. While technical feasibility could be reconstructed, value acceptability is absent and unlikely to appear in any near term.

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